Good evening. I`m Chris Matthews up in New York. We`re just two hours
away from President Obama`s sixth State of the Union address and for the
first time in his presidency, he`s facing a Congress that is completely
controlled by the Republicans.

But that fact, known since November, has clearly liberated Barack Obama.
The president`s putting forward an audacious and progressive agenda
tonight. Chief among his proposals is a new tax plans that shifts more of
the tax burden to the rich, the top 1 percent.

Well, today, he got some good news from the NBC/"Wall Street Journal" poll.
His approve rating is the highest it`s been in 15 months. And meanwhile,
the public is growing increasingly optimistic -- you heard it here -- about
the state of the country. More Americans are satisfied with the economy
now than at any point in the past 10 years. And fewer Americans believe
the country is in a state of decline than at any point since that question
was first asked back in 1991. So people are optimistic right now.

There`s good reason for that optimism. Unemployment is down to nearly 5.5
percent -- 5.5 percent. The Dow Jones is surging to record highs, of
course. Gas prices -- we all know that -- at the pump have plummeted down
to around $2. The economy grew 5 percent, which is pretty darn good, in
the third quarter of last year.

So it`s pretty hard for Republicans, even the craziest of them, to make the
case that the president is, quote, "destroying our country."

For more on tonight`s big speech, I`m joined by Senator Chuck Schumer of
New York and Senator Barbara Boxer of California, and David Axelrod, a
former senior adviser to President Obama, now an NBC News senior political
analyst.

I want to start with Chuck Schumer since I`m in your state. Tonight seems
different. For whatever reason, I`m getting a little excited about
tonight. I get a sense it`s going to be the liberated Barack Obama
tonight.

SEN. CHUCK SCHUMER (D), NEW YORK: I think that`s exactly right. He
realizes that he can do a lot of things even with the Republican minority.
(sic) I think he`s caught the nation`s pitch exactly right that, yes,
we`re doing better, but the middle class still needs help. They haven`t
gotten all the benefits from this recovery. So he`s in sync with the
American people. He`s feeling very good about himself and his positions.
Every time I`ve met with him since the election, man, he`s -- he`s great.
He has his mojo back. He`s on fire. So I`m expecting a really exciting
speech.

MATTHEWS: Barbara Boxer, my great friend, 30-some years ago, I sat in your
office and sat on the couch and told me it was up or out, you were going
for the U.S. Senate. And here you are, my dear, five straight victorious
elections in California being yourself. You have never stopped being a
progressive.

Tonight, how do you feel the president`s going to go? Is he going to go as
far as you go generally and be a pure progressive tonight?

SEN. BARBARA BOXER (D), CALIFORNIA: I think this president is going to
show that confidence that we`ve been seeing. And there are reasons for it.
You laid those out. The people get it. They understand it. I think we`re
going to see him say, Let`s just keep on going.

You know, he`s breaking all the records in terms the job creation, private
sector growth. His long streak, 5.6 percent, as you said, unemployment.
And now I think he`s going to say, Let`s do more. As Chuck said, we`ve got
to lift the middle class. That means raising the minimum wage. I hope he
talks about that. It means tripling the child care tax credit for our
middle class families. He will talk about that. It means rebuilding our
infrastructure and creating millions of jobs.

And the last point I want to make at this segment is this. He has to stand
strong, and I think he will, against any repeal by this Congress of "Obama
care," that is working in my state. The uninsured are down by 50 percent,
and medical errors are being reduced because of this law. And he has to
stand strong on Wall Street reform and not allowing them to repeal the
executive orders on immigration, which is so essential to our economy and
for keep families together.

MATTHEWS: Well, in tonight`s speech, the president will emphasize the
theme of income inequality and call on the country to, quote, "turn the
page" on wars, and of course, the recession he inherited.

According to excepts released by the White House, the president will say,
quote, "At this moment, with a growing economy, shrinking deficits,
bustling industry and booming energy production, we have risen from
recession freer to write our future than any other nation on earth. It`s
now up to us to choose who we want to be over the next 15 years and for
decades to come. Will we accept an economy where only a few of us do
spectacularly well, or will we commit ourselves to an economy that
generates rising incomes and chances for everyone who makes the effort?"

Let me go to David Axelrod. You`ve been with him. You`ve been with a lot
of candidates over the years, minority candidates in most cases. You`ve
always been on that progressive side. Is the president going to really go
for it in these last -- well, in football and basketball terms, this last
quarter, it looks like?

DAVID AXELROD, FMR. OBAMA SENIOR ADVISER, NBC SR. POLITICAL ANALYST: Well,
look, first of all, I don`t think there`s a lot of mystery about where he`s
going tonight because he`s been very clear in the last few weeks about the
initiatives that he`s going to champion. And they go to that fundamental
issue of middle class security, of economic mobility.

So yes, Chris, I think that`s where he`s going to go. Everything Senator
Boxer said -- and by the way, Senator, congratulations on a spectacular
career.

But you know, he -- I think those who are looking for a clear sense of
direction, progressive direction, won`t be disappointed in this speech.
And I think he`s done a very smart thing by laying out the sort of pros of
it, the blueprint of it in advance, so he can really soar tonight and give
a sense of direction to the country. And I think it`s going to be a very
powerful speech.

MATTHEWS: Well, the economic trends, as I said, think are all fairly
positive at the moment. The American public is feeling better about the
state of the country. Yet it wasn`t that long ago when conservatives were
predicting the total collapse of the American economy and other apocalyptic
outcomes if President Obama were reelected in 2012. Remember that?

Well, let`s watch the old predictions.

(BEGIN VIDEO CLIP)

MITT ROMNEY (R-MA), FMR. GOV., PRES. CANDIDATE: If this president`s
reelected, you`re going to be chronic high unemployment continue for
another four years or longer, you`re going to see low wage growth, if any
growth at all, and of course, there`ll always be this fiscal calamity at
our doorstep.

SEN. MIKE LEE (R), UTAH: Well, when you think about the fact that if he`s
reelected, that it`s a total of an additional 58 months, with that
increase, gas prices will be up at around $6.60 per gallon.

RUSH LIMBAUGH, RADIO TALK SHOW HOST: The country`s economy is going to
collapse if Obama is reelected. I don`t know how long, year-and-a-half,
two years, three years?

ROMNEY: Look, one thing you can know, and that is if we reelect Barack
Obama, Iran will have a nuclear weapon.

CHUCK NORRIS, ACTOR: We`re at a tipping point, and quite possibly, our
country, as we know it, may be lost forever if we don`t change the course
our country is headed.

UNIDENTIFIED MALE: Imagine a small American town two years from now if
Obama is reelected. The wait to see a doctor is ever increasing, gas
prices through the roof, and their freedom of religion under attack.

(END VIDEO CLIP)

MATTHEWS: Senator Schumer, it seems to me watching history the last 20, 30
years, the Republican argument has been -- and I don`t think Democrats make
this argument -- if you`re popular, you must be successful, and if you`re
successful, therefore, you must be right. And as long as they can hang on
that Reagan record of Reagan being popular with the country -- he was
(INAUDIBLE) sunny personality -- he was a great guy and everything was
right.

Suddenly, we`ve noticed the numbers are moving in Obama`s direction. The
president now is at 50 percent in the "Washington Post"/ABC poll. He`s
moving up in our poll.

Could it be that you`ve got an opportunity coming now, with his popularity
-- can that give him a gust of wind from behind?

SCHUMER: Oh, yes, I think, absolutely, that`s the case. You know what`s
so interesting, Chris? They`re no longer using their old rhetoric --
deficit reduction, cut the government, everything`s too out of control.
Instead, they`re appropriating the president`s rhetoric. They`re talking
about the middle class. They`re talking about job growth.

Now they`re on our playing field. You know, for a few years, we had to
play on their playing field. They`re playing on our playing filed. And I
wouldn`t be surprised if things continue the way they are, and I have no
reason to think they won`t, that they`re going to come and compromise with
us.

Just tomorrow, something unheard of, the day after the president gives his
speech, having two Republicans trumpet the fact that they`re for a minimum
wage increase. It`s not as high as it should be, but the fact that they`re
calling for it is interesting. And while it unites us in a significant
wage increase, it divides them. I`m sure there are 20 or 30 Republicans in
the Senate who won`t even vote for it.

So it`s sort of all flipped. In other words, we`re on the high ground.
The things we`ve been talking about are popular with the public. The
things they`ve been talking about don`t work. And they`re divided, we`re
united. So it`s going to be a really fun -- at the very least, fun and
hopefully, better than that productive year or two.

MATTHEWS: You know, Senator Boxer, I was with the president for the usual
briefing today. And it`s all off the record, but one thing you could
surmise was, it`s almost like there`s a conversation going on between he,
the president, and perhaps the next president, Hillary Clinton, who 85
percent of Democrats want to run.

He`s going to talk tonight -- we`ve seen it in the excerpts they`ve
released. You`ve probably seen it. He`s talking now about how he wants to
lead (ph) the future. How`s that work between -- and oh, Podesta now, the
top Clinton guy, who`s going to be working with Senator Clinton. How do
they work this thing as a team? I sense there`s a team being developed
here between Obama and Hillary -- Hillary Clinton.

BOXER: Well, let me just say this. The minute he chose Hillary to be his
secretary of state, you knew this was the "team of rivals," and you knew
that she was going to do a great job, which she did, and even the
Republicans had to finally give up all their investigations on you know
what. What was that word? Ben-gazzi...

MATTHEWS: The B word.

BOXER: ... as you always...

(LAUGHTER)

BOXER: So the bottom line is they made that team. And I can tell you
right now there`s cross-pollination all over the country. I`ve been doing
some things for the Hillary PAC. I`ve appeared about four times. And who
do I see? at these events but people who supported Barack, people who
supported Hillary. There is a coming together.

I want to make one point about what Chuck said. I think he`s absolutely
right. They`re very unsure now of what they want to do. But right now,
what do they have on the floor of the Senate? A Keystone pipeline bill
that`s going to create 35 permanent jobs.

They ought to listen to this president tonight talk about rebuilding our
infrastructure, our roads, our bridges, our highways, et cetera, and take
that bill off the floor. Let`s get going on more of these jobs because the
truth of the matter is, we can even do better. We are doing great, but as
Chuck said, it`s about the middle class, making sure they get the benefits.
(INAUDIBLE) here tonight and get off this Keystone deal because he`s going
to veto if. Sixty-one percent of the American people say let the process
play out. And let`s go to a job creation bill.

SCHUMER: You know, they can`t -- Chris, they can`t help themselves.
Keystone`s a special interest bill.

BOXER: Yes.

SCHUMER: It benefits some Canadian pipeline companies. They want to
export -- allow the export of the oil. So we`re building a straw, as Eddie
Markey says, from Canada across the United States to send the oil to the
rest of the world.

Today we had an amendment -- make the steel in America. They couldn`t
bring themselves to vote for it because it would hurt the pipeline
companies. That`s about jobs. So even on this, their first issue, which
should be their strength, they`re tied in a knot.

MATTHEWS: I love the way you talk! Let me go back to -- that`s all right.
I thought you`ll pull back. No pulling back there.

Let me go to David Axelrod. The president of the United States the last
quarter -- what do you think? What do you think he`s thinking? You know
(INAUDIBLE)

AXELROD: Well, I -- look, I think -- you know, in speaking to him and
watching what he`s doing, he`s not -- you know, he`s not looking at these
polls, actually Chris. You know, he`s not thinking about the sort of
transient politics. He wants to leave a lasting impact and do the most he
can on all these issues -- on middle class security, on climate change, on
all the issues that he`s -- that he feels has real importance for the
future.

And I think that`s what people are responding to. They want to see this
country move forward, and they see a president who`s committed to that and
a Republican Congress that`s, frankly, been standing in the way and that
now seems flummoxed in response to all this good news.

MATTHEWS: Yes. Well, I can`t talk about it because it was off the record,
but the president was really something today on the issue of -- of what
we`re facing in the world in terms of terrorism, and at the same time, not
letting the world become a war against Islam. So many people on the right
seem to want to play that card.

Anyway, thank you, Senator Chuck Schumer. Again, my personal
congratulations to one of the great legislators ever, who never changed
their stripes, Barbara Boxer, 5 and 0 for U.S. Senate. How many people can
do that? Thank you. I`m sure Chuck will do a lot more than that!

MATTHEWS: Coming up, much more on the president`s historic State of the
Union address coming up tonight at 9:00. For the first time in his
presidency, he`ll be taking on a Republican-controlled Congress, as I said,
and Republicans are readying (ph) a major counter-offensive tonight with
Senator Joni Ernst -- remember her, the Iowa castrator -- leading the
charge. It`s going to be quite a night and quite a fight.

And this is HARDBALL, the place for politics.

(BEGIN VIDEO CLIP)

RONALD REAGAN, PRESIDENT OF THE UNITED STATES: President Washington began
this tradition in 1790, after reminding the nation that the destiny of
self-government and the preservation of the sacred fire of liberty is
finely staked on the experiment entrusted to the hands of the American
people. To our friends in the press who place a high premium on accuracy,
let me say I did not actually hear George Washington say that.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

REP. JOHN BOEHNER (R-OH), SPEAKER OF THE HOUSE: Tonight isn`t about the
president`s legacy. It`s about the people`s priorities. Making government
bigger isn`t going to help the middle class. More growth and more
opportunity will help the middle class, and those are the Republican
priorities.

MATTHEWS: Welcome back to HARDBALL. That was the speaker, of course,
Boehner, John Boehner. We`re less than two hours away from President
Obama`s State of the Union address, and the Republican pre-buttals, as
you`ve seen there, have already begun. That was the speaker with his
response, which was released in the last hour.

Well, President Obama`s riding a wave of good feeling in the polls right
now as the American job market has surged to life. And today`s address --
tonight`s address will mark a climax in the president`s recent surge of
defiance, I`d say, which has seen him forge ahead on climate deals with
China, immigration actions by executive order, and an historic opening to
Cuba, and a flood of populist policy proposals designed to put Republicans
on the defense.

But for the first time in his presidency, he will be addressing a
Republican-led Congress. And the Republican Party is readying (ph) a
counter-offensive, of course. Freshman senator Joni Ernst of Iowa, famous
for her campaign ad about castrating hogs -- she was doing it -- will be
leading the charge by delivering the party`s official response. And she`ll
be vying for the spotlight along with Rand Paul, Ted Cruz and others in the
Tea Party who are all broadcasting their own responses tonight, which is to
me emblematic of the differences.

Congressman Jason Chaffetz of Utah is a Republican and Steve Schmidt is a
Republican strategist and MSNBC political analyst.

Congressman Chaffetz, thanks for joining us. First of all, you are on the
"Romney Special," I understand. You want him to go for a third try.

REP. JASON CHAFFETZ (R), UTAH: I want to put our best foot forward. I
want to win back that White House. And I think Mitt Romney in the field so
far I think has the best chance to not only win but be a great president.

MATTHEWS: I thought it was a good idea for him to get in the race about
four or five months ago and told people that because I thought the economy
was still dodgy. But with these new numbers out there right now about job
growth, wage growth, Dow Jones growth, everything highly -- and actually
superior to the rest of the world -- I was just in Europe this weekend --
much better than what`s been going on over there, and yet you still think
he`s the guy to go back and talk about the economy.

CHAFFETZ: Oh, I do. I think the strong suit for Mitt Romney is definitely
about jobs and the economy. Income disparity is at its, you know, record
highs. And I think if you want to talk to the entrepreneur, the new person
who`s starting a business, the person who wants to expand their business --
how do you grow it -- Mitt Romney is the single best person to do it.

And on the foreign policy front, he`s been downright prophetic in talking
about Russia and the geopolitical problems there and about terrorism, I
mean, in contrast to Hillary Clinton, who`s got nothing to talk about...

MATTHEWS: Well, anybody can do what you just did. Look, anybody can do
that.

CHAFFETZ: No!

(CROSSTALK)

MATTHEWS: I want to ask you about Romney. Romney`s notorious...

CHAFFETZ: But Mitt Romney was on the record in the last election talking
about these issues, mocked by Barack Obama, about talking about Russia.
He`s got credibility to talk about it because he foreshadowed it and he was
right!

MATTHEWS: OK, except that he`s best known for a phrase about 47 percent of
the country, not really caring about those people. And now he is saying, I
care most about inequality in the country.

How did he change? When did he go on the road to Damascus? What switched
in his life, from being a guy who cares about the elite to a guy who cares
about the little people? When did that happen? Give me the month?

CHAFFETZ: The Mitt Romney -- the Mitt Romney that I have always known has
always been about bringing America together, to being a uniter.

(CROSSTALK)

MATTHEWS: Well, answer my question, though; 47 percent are now his valued
children. When did that happen? Tell me when it happened.

CHAFFETZ: No, no, that`s a little bit of a cheap shot.

If you`re asking me for my opinion, I believe and have known Mitt Romney
for years. I think he`s the best person to help grow jobs and the economy.

MATTHEWS: OK.

CHAFFETZ: That`s my personal opinion. I don`t expect you to agree with
it.

(CROSSTALK)

MATTHEWS: No, I might agree with it if I heard the answer. When did he
change from a guy who derided the 47 percent at the bottom and now he`s
going to champion them? When did that happen, that change?

CHAFFETZ: No. No. You can keep trying to repeat it. It doesn`t
necessarily make it true.

MATTHEWS: I will try some other questions later. But thank you for that.

Let me go to Steve, Steve Schmidt.

What are the Republicans going to do tonight to rain on the parade?

STEVE SCHMIDT, MSNBC POLITICAL ANALYST: Look, there`s a Charlie Brown,
Lucy with the football element to all of this always with the responses.

(CROSSTALK)

MATTHEWS: OK. Who is Lucy and who is Charlie?

SCHMIDT: Well, Lucy may by Joni Ernst. I can`t imagine why anyone thinks
it`s a good idea to sign up to give the response to the State of the Union.
You look at Bobby Jindal. You look at Marco Rubio. If past is prologue,
this isn`t necessarily always a job you want to have.

MATTHEWS: Why is it so hard to look good as the voice against the
president?

SCHMIDT: Because you see -- you see the full majesty of the office of
president of the United States on display here as we go through the
ceremony, as he`s introduced, as the Congress comes to their feet and
stands, and goes through the ceremonial applause.

This is a pageant of American democracy. This is a moment in time, despite
all the political differences, where Americans can look at this and see the
best aspirations of the founders come to life. We see the African-American
president up on the dais addressing the nation, addressing the world at a
time of global challenge.

And so by definition, the response makes the respondent small, just not
because they`re not a good politician or they don`t have a great message,
but it`s just very difficult to compete against the trappings and power of
the office of president of the United States that you see on full display
tonight.

MATTHEWS: Yes.

You know, like Sarah Palin, I think it`s fair to say, to Joni Ernst -- you
can make this criticism or not -- I`m not making this criticism -- as sort
of a cowgirl, an Annie Oakley, a Cat Ballou image, a tough girl who is very
likable.

What do you think about that likability factor, Congressman Chaffetz? What
do you think it was about Todd Harris puts together a commercial that has
her castrating hogs, and everybody sort of likes her, men and women both?
What is that in the American psyche that goes to that sort of image?

CHAFFETZ: Well, you want to just relate to somebody.

And I have spent time in Iowa with Joni Ernst. She`s the real thing. She
has got that military background, but she`s been out there on the farm.
She just represents a lot of people and can do it with a smile on her face.
Sometimes, it`s the intangibles that penetrate through.

And, look, there are a lot of angst out in the country about the growth and
expansion of government. And when she was talking to the Republican base,
she made a very good, vivid point that got a lot of attention.

MATTHEWS: I guess it did.

CHAFFETZ: And it was very successful.

MATTHEWS: Apparently so.

Just tonight, by the way, in just a few moments, we have got an early look
at Senator Ernst`s Republican response. Here are some of the highlights of
excerpts that have been released by Republican leadership. She attacks the
president, saying -- quote -- "Americans have been hurting, but when we
demanded solutions, too often, Washington responded with the same stale
mind-set that led to failed policies like Obamacare."

As for the Republican agenda, she says -- quote -- "Let`s tear down trade
barriers. Let`s simplify America`s outdated and loophole-ridden tax code.
And we need a comprehensive plan to defeat terrorism."

Tax reform is -- everybody agrees, get rid of the loopholes, lower the
rates.

SCHMIDT: Look...

MATTHEWS: That`s easy.

SCHMIDT: The tax code in this country is utterly uncompetitive. It`s a
drag on the American economy. It costs billions of dollars a year and it`s
incomprehensible.

Secretary Rumsfeld always signs an addendum that his taxes that essentially
says, I have no idea what I`m actually signing here. It`s
incomprehensible. And we ought to fix it. And that ought to be the
province of Congress to do that and members of both parties could work
together on that.

MATTHEWS: Congressman, can you do that? You did it back in `86 with
Reagan and O`Neill.

And I just wonder, you lower the rates, the corporate rates, everybody --
but you have got to take away the loopholes to keep it neutral.

CHAFFETZ: Yes, I would love to do that. Broaden the base, lower the
rates. That`s what we want to do.

Republicans, though, myself included, we don`t want to see a $320 billion
tax increase, as the president proposed. Do we need tax reform?
Absolutely. Should we do it in a bipartisan way? I hope so, but we are
committed to that agenda. We just don`t want to have the couple un billion
dollars in tax increases along the way.

MATTHEWS: So, it`s fair to say -- I want to ask you this too -- are we
going to have a big debate over taxes the next year or two, big debate?

Up next, a Russian spy ship has just docked in Havana in plain sight --
there it is -- as the Obama administration begins talks with the Cuban
government.

Meanwhile, we have got a battle brewing on tonight`s State of the Union on
those historic actions by President Obama to normalize relations with the
government in Cuba.

And this is HARDBALL, the place for politics.

(COMMERCIAL BREAK)

MATTHEWS: Welcome back to HARDBALL.

Well, party divisions between Republicans and Democrats over the
president`s new policy toward Cuba will be on full display during the State
of the Union tonight. Among the president`s guests this year will be Alan
Gross. Of course, he was the freed American contractor who spent five
years in a Cuban prison.

He was released by the Cuban regime last month in a move that made it
possible for us to restore diplomatic relations with Cuba. Gross will be
sitting with first lady Michelle Obama in the first lady`s box tonight.
And not to be outdone, several Republicans have decided to host several
Cuban dissidents as a symbolic rebuke to the president`s new policy.

Speaker Boehner will host a leader from the Cuban resistance movement and
Marco Rubio of Florida is hosting a woman whose father was believed to be
killed in a scheme orchestrated by the Castro regime.

Meanwhile, an armed Russian spy ship -- Catholic this sailed into a Havana
harbor today, a Russian spy ship, and it remains docked in port in advance
of a U.S. top-level delegation which is arriving tomorrow for bilateral
talks with the Cuban government. What a show.

I`m joined right now by Democratic congressman Chuck -- Charles Rangel of
New York, as well as MSNBC political analyst Howard Fineman, now global
editor of The Huffington Post.

Mr. Rangel, I don`t know who on our staff said Chuck Rangel. I have never
heard you referred to that way.

(LAUGHTER)

MATTHEWS: And I would never do such a disservice to such a great man.

(LAUGHTER)

MATTHEWS: But, Mr. Rangel, you represented the First District. I`m just
wondering, what do we make, as Americans, of this sort pushback by the
Republicans against what looks to be an opening for everybody`s good?

REP. CHARLES RANGEL (D), NEW YORK: What are you talking about, the
Cuban...

MATTHEWS: Yes, the Cuban opening.

RANGEL: Oh, listen, the whole thing was about Electoral College votes in
Florida. And we`re sensitive to the people that had big problems with a
dictatorship in a communist country.

And I think we should be sensitive to that. But what`s far more important
is, what`s in the best national security and economic security of the
United States? It`s not just forming a relationship or reestablishing it
with Cuba. It`s Mexico, Central America, South America, the hemisphere.

And, so, yes, we wish the Chinese were democracies, and the Vietnamese were
democracies, but we have to move forward. And thanks God the president has
taken this political weight off of Republicans who knew the embargo was
wrong, as well as Democrats.

MATTHEWS: Well, one thing I know about you, sir, is that you fought the
Chinese communists in Korea. You risked your life. You barely God back.
Thank God -- actually, thank God you got back. I think you know all about
that.

And now the question is, is this basically the worst thing that could
happen to Cuba if you`re a communist, as we used to say, a commie, that if
we do get in there with trade and the former Cubans get to meet with the
other Cubans and the word gets around that we have new cars now and things
like that get out there, that maybe that will bring down that regime.

What`s your view?

RANGEL: I`m telling you, I was there when the president made his
announcement.

And the people were dancing in the street. I`m not talking about the
administration. I`m talking about the poor people in Cuba said, there`s
two things like they about the United States of America. One is American
movies. And I said, and what else? They said every darn thing else.

(LAUGHTER)

RANGEL: They love us. They were -- they tried to give us blood during
Katrina, during 9/11.

The embargo was just governments fighting each other. But Americans love
the Cuban people. The Cuban people love us. And maybe we can get rid of
some of these spy Russian ships by pushing in our big cruises there and
getting to know people a lot better.

MATTHEWS: Let me go to Howard Fineman.

Sir, thank you, Mr. Rangel.

Let me -- it seems to me that the whole problem is the Republicans are
doing the thing they always do. You know, when gay people wanted to get
married, they said, oh, we will be against that. We will go with the
people that don`t like that, the more conservative people. And then when
blacks began to get rights in this country in `64, oh, we will go with the
whites in the South who don`t like that.

They pick up the sort of the detritus politically. And now they`re going
around saying to the older Cuban-Americans -- and they have a fight, of
course, a fair argument -- let`s go with them.

Why does the Republican Party -- why are they trying to build a political
party over the -- sort of the yesterdays of the Democratic Party?

HOWARD FINEMAN, NBC CHIEF POLITICAL CORRESPONDENT: Well, because in recent
decades, they have been built on resentment, Chris. They have been built
on cultural politics and fear and cultural resentment. And that`s the case
here.

MATTHEWS: Well, where`s the win?

FINEMAN: Well, there is no win right now.

(CROSSTALK)

FINEMAN: Marco Rubio, Marco Rubio, the senator from Florida, Cuban-born,
and -- and really full of knowledge of all of the fear and resentment and
anger about the Castro years, et cetera, nevertheless was trying to move
out and make himself available to and be a peacemaker in the Hispanic
community generally in the United States.

But it`s almost like the "Godfather" movie. You know, he tries to get out
and they pull him right back in. And now he`s got to be the hard-line
Cuba-first/Cuba-only politician, playing to the resentments at the base of
the Republican Party and in Florida, where older Cuban-Americans and older
Cuban immigrants are still resentful.

Younger Cubans, if you look at the polls, younger Cuban-Americans are for
normalization of relationships -- relations. Most Hispanics throughout the
rest of America are also for that, but Rubio got pulled back in.

MATTHEWS: I know.

FINEMAN: And he is symbolic of the predicament of the Republican Party.

MATTHEWS: There is nothing in American politics that cannot be compared to
"The Godfather," Howard.

Congressman Rangel, sir, my hero, thank you very much for coming on
tonight.

RANGEL: Thank you, Chris.

MATTHEWS: We have got to get back to the rest of this stuff. I love what
you said about Cuba and I love what you have done for our country.

Thank you so much.

RANGEL: Thank you, Chris.

MATTHEWS: Charles Rangel of New York, and Howard Fineman from Huffington,
global Huffington.

Up next, we`re less than 90 minutes away now from the president`s State of
the Union, and we`re tackling the big issues tonight, of course. This is
about more than just a speech, you might say. This is about history
tonight. It`s about setting a vision and setting an agenda for the next
president, I think, as well.

The roundtable is going to come up and talk about that in just a minute
right here on HARDBALL, the place for politics.

Jury selection has begun in the trial of James Holmes, who is accused of
killing 12 people and wounding 70 others in an Aurora, Colorado, movie
theater in 2012. He`s pleaded not guilty by reason of insanity.

Indonesia`s transport minister says AirAsia Flight 8501 was climbing like a
fighter jet before it disappeared from radar last month.

And a new ISIS video has emerged showing two Japanese hostages. A militant
in the video says both hostages will be executed unless a $200 million
ransom is paid within 72 hours -- now back to HARDBALL.

MATTHEWS: Welcome back to HARDBALL.

I`m joined right now by the HARDBALL roundtable. I want you to know what
you`re watching for tonight and they`re going to tell us what we are
looking for tonight, especially from the Republican opposition.

Michael Steele is the former chair of the Republican National Committee, of
course. Joan Walsh is editor at large at Salon. And Robert Gibbs is
brilliant at "Jeopardy," as President Obama`s former press secretary.

MATTHEWS: Anyway, I want to -- I have to tell you something, in all
fairness, tonight.

You can ignore ISIS, but it`s still there.

MICHAEL STEELE, MSNBC POLITICAL ANALYST: It`s still there.

MATTHEWS: And they`re killing people. These two poor Japanese guys, I
don`t think there`s any argument they`re -- I don`t even know if they even
have a trial. They just do it. And they want $200 million, because they
figure the Japanese have the money.

STEELE: Well, and that`s one of the challenges that the president, I
think, is going to have to walk, not so much tonight, but afterwards.

I mean, I think a lot of people are going to celebrate with the president
the good economic news. But this is the harsh reality, Chris, that these
things are still happening. And there is concern about how this
administration, who`s made it very clear, we want to get boots off the
ground, now in a position of having to put some boots back on the ground.

And what does that mean going forward? And, so, it will be interesting to
see how the president addresses it tonight. From what he`s already put out
so far, it doesn`t look like he gets too heavy. But I think longer term,
it`s a big problem for him.

MATTHEWS: Robert, how is he going to explain the victory -- because I`ve
read the text, the excerpts so far? He says we`re gong to win somehow,
with the international community behind us. And what? What`s on the
ground? Who`s actually going to get on the ground and start shooting the
bad guys?

ROBERT GIBBS, MSNBC CONTRIBUTOR: Well, part of what we`re going to do and
probably what he`s going to talk about is how do you train people in Saudi
Arabia or in Syria to do some of that boots on the ground stuff, and I
think a lot of this obviously going to become --

MATTHEWS: Train who?

GIBBS: Well, I think a series of fighters to go in and be those --

MATTHEWS: Syrians?

GIBBS: I don`t think it`s Syrians, but I think it`s retraining Iraqis. We
are clearly not going to put thousands of troops on the ground. That
obviously is one of the things --

MATTHEWS: But they are. The other side`s got 30,000 troops fighting us,
and we don`t have, what? What do we have fighting there?

GIBBS: F-16s, F-22s, stealth bombers, and I think you`ll see a lot of this
come certainly through airpower. It is going to take sometime, I think
everybody understands it.

MATTHEWS: Yes, because the big story I`m raising here is not just the
horror of what we saw with the two Japanese guys, Joan. But I can hear it
coming, the echo already, the Republican charge against the president
tonight -- where is your comprehensive plan to attack ISIS?

JOAN WALSH, SALON.COM: I don`t know that`s the role of the State of the
Union right now, but --

WALSH: Well, sure, but I think it`s possible to say the "Charlie Hebdo"
attacks changed a lot of things too, that Europe is much more engaged in
this fight and should be much more engaged on this fight on the ground, not
just rhetorically. So, you know, I think the president has done a great
job of diplomacy on this. So, you know --

STEELE: But are the Europeans prepared to put boots on the ground? And to
your point it`s not just the airpower. You now have generals who are
saying at some point you`re going to have to deal with the face-to-face
boots on the ground, because the fighters in the air can only do so much.
Once you capture an area, that doesn`t mean you control it and that`s --

MATTHEWS: You mean the spotters at it (ph).

STEELE: Exactly.

MATTHEWS: Anyway, as I mentioned, the president will tell Congress tonight
that America is making progress in the fight against ISIS. According to
excerpts of the speech, the president will say, quote, "And tonight, I call
on this Congress do show the world that we are united in this mission by
passing a resolution to authorize the use of force against ISIL."

Now, ISIL is the way he calls, the Islamic State, and I know why. But
that`s an interesting thing to throw out there, and a little bit dangerous.

GIBBS: The authorization?

MATTHEWS: He has to get it now.

GIBBS: Well, I think -- look, the good news is you have a very united
front. This isn`t like when the president initially thought about going
in, in retaliation to chemical weapons in Syria. This is -- there will be
some debate about it, but I think there`s no doubt, the one thing you can
bet on tonight is there will be a united front in discussing and deciding
that this is a fight that we would far rather have 15 miles -- 15,000 or
10,000 miles away than we would in New York or in Washington.

MATTHEWS: What do you think will be the meaning, Michael, of such a
resolution? It`s going to let him do things, but it won`t mandate him to
do anything.

STEELE: I`m sitting here, Chris, asking myself, well -- you know, use of
force to do what? And so, the Congress can give you a blank check, not
necessarily meaning --

STEELE: They did in 2000. And so, the question that`s having learned from
the lesson of 2002 and 2003, what does this mean, Mr. President? Is the
president going to really spell out what he intends to do? That`s the part
we don`t know yet.

WALSH: Well, right, but there`s a time for that. I mean, I think it`s
very important --

MATTHEWS: It`s a war, we`re declaring war.

WALSH: I think it`s extremely important that he`s going to Congress. I
think this is a long term thing. I don`t think you can get away with a few
skirmishes and saying it`s going to go on for six months. So, I think
going to Congress, it is a risky. I`m a little less optimistic than you
are, Robert, that he will --

MATTHEWS: Why is he doing it? He said before he didn`t have to.

WALSH: Because I think hi recognizes this is a long-term problem and this
is really going to require a lot more national will and a lot more national
buy-in.

STEELE: And I think rightly so, because the problem that I`ve always had
in the past is when the Congress has almost abdicated its responsibility to
really vet down and through --

MATTHEWS: So, if guys get killed over there --

(CROSSTALK)

STEELE: Both parties are responsible for it. Exactly, Chris. Exactly.

MATTHEWS: Is that why he`s doing it?

GIBBS: Look, I think there has to be --

MATTHEWS: This is a big story tonight.

GIBBS: I think we as a country want to see our leaders in a constitutional
democracy all take that step forward and say we are all opposed to this
radical Islam. I think we have to be careful we`re not at war with people
that practice the --

MATTHEWS: But you`re going to hear Republicans saying, call it Islamic
terrorism. They for some reason, I`m hearing all this is coming tonight,
they want to say -- they used to say Islamo-fascism. They want to make it
ethnic, when everybody knows it is potentially -- it comes from a subgroup
of the people in that religion, but it`s not speaking for the religion. At
least we refuse to recognize that.

STEELE: That`s true, but they don`t want to make it ethnic. They just
want to call it what everybody --

STEELE: That`s exactly -- the president himself wouldn`t say what Robert
just said.

And so, if you have the President Hollande calling it that, if you have the
Prime Minister of Great Britain Cameron calling it that, why can`t the
president be with the rest of the world and call it what it is?

WALSH: Because I think he thinks it`s important to not make enemies.

STEELE: They are already our enemies.

WALSH: A small --

MATTHEWS: Islam?

GIBBS: But this is a very important point. We are not at war with that
religion.

STEELE: We know that.

GIBBS: Hold on. In all fairness, Michael, not everybody in your party
knows that. Not everybody in your --

GIBBS: Bobby Jindal is in London doing interviews saying there are no-go
zones where Islamic law governs parts of England and parts of France. This
was something -- this was something that caused David Cameron as he was
walking off the set to say that guy as an idiot, OK? He`s thinking of
running for president, actively thinking.

So, let`s -- I mean, look, I get passionate about this, I know the
president does, too. I think everybody has to. Because their target often
Islamic terrorists -- I`m happy to use that term, their target all too
often is people of their own religion. But we have to separate that.

STEELE: That doesn`t mitigate what it is. That doesn`t mitigate who is
doing it.

GIBBS: Of course it doesn`t.

STEELE: It doesn`t mitigate the fact that they hijack this religion.

MATTHEWS: I think it helps their cause to call it Islamic terrorism. They
want to ignite anger against the West.

WALSH: And we are a different country. We are not France or England. We
have a different approach.

MATTHEWS: I`m very much against "Je Suis Charlie" for that reason. Well,
I`m not part of that magazine`s editorial staff. I don`t believe in making
fun of other religion. I wouldn`t buy the magazine. I`m not Je Suis-
anything. I think we ought to be -- you don`t like it (ph).

We`ll be back in an hour, by the way. We`re an hour away from the
president`s State of the Union. It`s coming up.

The roundtable is staying with us to the end of this hour. And this is
HARDBALL, the place for politics.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: With or without this
Congress, I will keep taking actions to help the economy grow, but I can do
a lot more with your help, because when we act together, there`s nothing
the United States of America can`t achieve.

(APPLAUSE)

(END VIDEO CLIP)

(COMMERCIAL BREAK)

MATTHEWS: We`re just over an hour right now for the State of the Union.
I`m back with the roundtable, Michael, Joan and Robert.

I think Joan is up. And my question is, what is the headline going to be?
Will Obama defiant? I would say something like that generally. But what
about you?

MATTHEWS: You think the Republican Party is smart to go for abolition of
all kinds of things that Obama, get rid of that, roll back history on Cuba,
roll back history on same-sex marriage? Are they smart to take that
position to your party? Roll back, it seems to be theme.

MATTHEWS: They don`t want to roll back Obamacare. They want to get rid of
it. They want to open, they want to kill --

(CROSSTALK)

MATTHEWS: Seriously --

STEELE: I`m going to answer your question. I think what you`re going to
see whether it is in Obamacare, whether it`s on Cuba, whether it`s on even
on the proposal that the president has on taxes, you`re going to see the
House and the Senate put together a package that puts parts of those things
on the table for the president.

STEELE: So, for example, Obamacare, medical device issue, on taxes, you`re
going to have probably something on capital gains, but you`re not going to
have this wholesale approach that the president wants.

WALSH: Because one thing, I point that, I really hope that he makes
tonight, is that a lot of these are Republican proposals. There is a Dave
Camp proposal. There`s a Paul Ryan proposal. There`s a Mike Lee proposal.

MATTHEWS: Obamacare was a Heritage Foundation proposal.

WALSH: Right. When he proposed it, they don`t like it.

GIBBS: I think what will be interesting to hear in the Republican response
in the days coming is not just what Republicans are against. I think
tonight starts the battle of ideas that takes us through 2016.

And I think you`ll be listening for somebody like a Joni Ernst, when she
talks about repealing health care, do Republicans talk about specific
proposals, not just repealing the medical device tax, but health savings
accounts, and things like that. I think you`re going to have to begin, if
you`re a Republican, we know you`re against Obama. The great thing for
Democrats and Republicans in 2016 -- his name isn`t on the ballot, right?
So, if you are a Republican that wants to compete in that contest, it`s now
your turn to shape the ideas of not only what you`re against but ultimately
what you`re for.

President Obama zooms into his fourth quarter with the wind at his back.
He`s up for doing things, up for setting a course, not just for the next
few years but the country`s future. And let me be more precise: he wants
people to know where he, Barack Obama, want this is country to go, where he
wants to lead the way for those that think like him even have he is
president.

This is about legacy. It`s about something else more imminent. It`s about
the vector he wants to set for progressive and moderate Democrats.

Yes, tonight`s speech will be political, you got it. If we can`t
Republicans who now control the Congress to go with him, that doesn`t mean
he`s going to be shy about saying where he wants the country to go in his
presidency either by executive action or with the legislative help of the
majority of Republicans, or afterwards by a Democratic successor in the
office.

So, when you watch here tonight, listen to those battle line points he
makes about closing the income equality gap, listen to the points he makes
about opportunity, financing community college, shifting the tax burden off
of the middle and working class. Giving people small and important breaks
like paid leave for new parents.

And none of this should strike anyone as strange. We have two parties in
this country both vying for national leadership. Voters have chosen
Republicans to run the Congress, a Democratic to be president, but there is
a vital imbalance in this division authority. Senators and members of
Congress are chosen separately. The president is chosen by all of us, all
at once together. Twice we have chosen Barack Obama to lead us.

Tonight is his chance to lean on his advantage. He, one person, can speak
authoritatively for what he believes what he wants, where he wants us to
go. Speaker Boehner cannot do that. He has a caucus of 246 members. Some
of whom can hardly be trusted to share his politics. A couple dozen who
did not even vote for him this time.

Mitch McConnell has 54 other Republican senators, several of whom lacked
even the smidgeon of the majority leader`s brand of old time Republicanism,
the bomb chucking character assassinating Ted Cruz, for example, gives his
salute not to McConnell, we`ve seen that, but to a hard drinking lad named
McCarthy, Joseph McCarthy.

So, tonight, the president has an edge, the elected privilege to speak not
just for himself, but for the progressive and moderate forces in this
country. While both Republican leaders will have to mute their words, so
as not to offend their often dodgy, sometimes dangerous renegade PACs.
It`s not going to be a fair fight, thanks entirely to the president`s
critics who have allied themselves at each election with ideologues they
need to hide on nights like tonight when the entire country is watching.

That`s HARDBALL for now. Thanks for being with us.

MSNBC special coverage of the State of the Union Address begins right now.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY
BE UPDATED.
END

Copyright 2015 CQ-Roll Call, Inc. All materials herein are protected by
United States copyright law and may not be reproduced, distributed,
transmitted, displayed, published or broadcast without the prior written
permission of CQ-Roll Call. You may not alter or remove any trademark,
copyright or other notice from copies of the content.>